tapebrief
WAT · Q3 2025

WAT · Q4 2025 Earnings

Cautious

Waters Corporation

Reported February 9, 2026

30-second summary

Waters closed FY2025 with Q4 revenue of $932M (+7% YoY) and non-GAAP EPS of $4.53, landing inside last quarter's $4.45–$4.55 guide and FY EPS of $13.13 hitting the top of the $13.05–$13.15 range. The headline event is FY2026's first guidance: organic constant-currency growth of +5.5% to +7.0% (midpoint ~6.3%), non-GAAP EPS of $14.30–$14.50 (+8.9% to +10.4% YoY), and a $3.0B contribution from the BD Biosciences combination plus $50M of revenue synergies. The Q1 guide of +0.0% to +4.4% EPS growth versus the FY +8.9% to +10.4% range tells you management is starting the year cautiously and explicitly leaving room for back-loaded acceleration as BD integration produces.

Headline numbers

EPS

Q4 FY2025

$4.53

Revenue

Q4 FY2025

$0.93B

+7.0% YoY

Gross margin

Q4 FY2025

61.1%

Free cash flow

Q4 FY2025

$0.13B

Operating margin

Q4 FY2025

29.0%

Key financials

Q4 FY2025
MetricQ4 FY2025YoYQ3 FY2025QoQ
Revenue$0.93B+7.0%$0.80B+16.5%
EPS$4.53—$3.40+33.2%
Gross margin61.1%—59.0%+210bps
Operating margin29.0%—24.0%+500bps
Free cash flow$0.13B—$0.16B-21.4%

Guidance

FY2026 guidance introduced with non-GAAP EPS of $14.30–$14.50 (+8.9% to +10.4% YoY) and total revenue of $6.405–$6.455B; Q4 FY2025 results met prior guidance, with EPS of $4.53 and revenue growth of +7% YoY.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
Non-GAAP EPSQ4 FY2025$4.45 to $4.55$4.53in-lineBeat
Reported Revenue GrowthQ4 FY2025+5.2% to +7.2%+7%in-lineMet
Non-GAAP EPSFY 2025$13.05 to $13.15$13.13in-lineBeat

New guidance

MetricPeriodGuideYoY
Non-GAAP EPSFY 2026$14.30 to $14.50+8.9% to +10.4%
RevenueFY 2026$6.405 billion to $6.455 billion—
Organic Constant Currency Revenue GrowthFY 2026+5.5% to +7.0%—
Non-GAAP EPSQ1 FY2026$2.25 to $2.35+0.0% to +4.4%
RevenueQ1 FY2026$1.198 billion to $1.211 billion—
Organic Constant Currency Revenue GrowthQ1 FY2026+7.0% to +9.0%—

Segment KPIs

Q4 FY2025
SegmentQ4 FY2025YoY
Instruments$0.433B+3.0%
Service$0.329B+9.0%
Chemistry$0.17B+13.0%
Pharmaceutical$0.541B+8.0%
Industrial$0.284B+8.0%
Academic & Government$0.107B-2.0%

Other KPIs

Q4 FY2025
SegmentQ4 FY2025YoY
Americas$0.332B+4.0%
Europe$0.316B+13.0%
Asia$0.284B+4.0%
Recurring Revenue$499.5 million—
Recurring Revenue Growth (Constant Currency)9%—
Chemistry Growth (Constant Currency)12%—
Instruments Growth (Constant Currency)3%—
Service Growth (Constant Currency)8%—
Organic Constant Currency Revenue Growth - FY2026 Guidance (Midpoint)6.3%—
Non-GAAP EPS Growth10%—
Operating Margin29.0%—

Management tone

External environment uncertainty → AI/cloud informatics pilots → Replacement cycle as mid-innings runway → BD integration as the operating story with conservative organic baseline

The replacement-cycle narrative has shifted from being the lead growth story to one of several drivers, with BD integration now occupying the strategic center of management commentary. Management's qualitative framing this quarter — "we expect this momentum to continue into 2026, driven by strong execution of the multi-year instrument replacement cycle" — keeps the cycle alive but pairs it with "opportunity for outperformance as the year progresses," language that signals the FY2026 guide is intentionally conservative rather than a confidence reset. The instruments deceleration from +6% to +3% gives the conservatism some teeth: management is starting the BD-included year on lower momentum than it ended the standalone year.

The BD synergy bridge moved from announcement (Q1) to structured plan (Q2: $345M EBITDA, $290M revenue, $200M cost) to operational countdown (Q3: 16 work streams mobilized) to embedded guide (Q4: $3.0B contribution and $50M revenue synergies in the FY2026 framework). On the Q&A, management described implementing a deal desk for pricing discipline and discounting discipline at BD as one of the immediate operational levers. This is the first quarter the BD revenue synergies are no longer a multi-year promise; $50M is in the print's math.

Guidance philosophy this quarter explicitly itemized the upside not baked in: A&G and pharma research recovery, China above mid-single digits, stimulus revenue, reshoring, Empower upside above headwinds, and chemistry above 6%. That's a six-bucket list management volunteered — an unusually explicit roadmap for the bull case, set against a Q1 EPS growth range that floors at zero. Read together, management is signaling that the print is the floor.

Q&A highlights

Tycho Peterson · Jefferies

Asked about BD business deterioration versus deal model, particularly weak segments (US academic/government, China, early-stage research), and path to recovery. Also asked about Empower subscription transition impact on instrument P&L going forward.

Management acknowledged Q4 headwinds (China DRG, US government shutdown, weaker flu season) are now in baseline, positioning 2026 as starting from lower base. Emphasized operational improvements (deal desk, pricing discipline, launch readiness) similar to Waters' turnaround. For Empower, noted LCMS grew high single digits throughout year; Empower transition was low single-digit headwind to instruments as planned and accounts for headwinds in 2026 guidance.

2.5% underlying growth assumed for BD in 2026 before synergies$50 million revenue synergies expected in 2026LCMS grew high single digits every quarterEmpower transition caused low single-digit instrument headwind in Q4

Catherine Schultz · Baird

Asked why full-year guide of 5.5%-7% implies deceleration from Q1 guide of 7%-9%, and whether this is prudence or driven by comparables and other dynamics.

Management explained guidance philosophy: lower end (5.5%) reflects instrument growth expectations, upper end (7%) reflects recurring revenue growth. Multiple upsides not baked in: assumed academic/government and pharma research don't recover, China assumed mid-single-digit vs. actual 9%, no stimulus revenue, Empower headwinds already incorporated, no reshoring revenue, chemistry assumed 6% vs. actual 12% finish. Q1 strength supported by four extra working days.

Chemistry finished 2025 at 12% growth, guidance assumes 6% for 2026China guidance assumes mid-single-digit growth vs. 9% in 2025Empower headwinds already included in full-year guidanceQ1 has four extra working days supporting higher growth

Jack Meehan · Mefron

Asked about deal desk setup for pricing optimization at BD, which product areas are in focus, and how it was optimized historically.

Management explained deal desk centralizes pricing examination and escalates discount requests to CEO level to prevent regional/sales discounting. For instruments (FACTS Discover S8, A8, S7, A7), pricing discipline is critical for new products. For recurring revenue, opportunity exists in service charges (installation, spare parts) and reagents (dyes, antibodies) where BD historically did 40-50 bps pricing vs. Waters' 200+ bps.

Deal desk centralizes pricing and escalates all discounting requests to CEOWaters achieved 200 bps pricing on overall portfolio, 400-450 bps on chemistryBD historically achieved 40-50 bps pricing, significant upside opportunityNew flow cytometry products: FACTS Discover S8, A8, S7, A7

Casey Woodring · J.P. Morgan

Asked to unpack chemistry's strong 12% growth into components: pricing, new products, and bio-separations. Also asked about pricing evolution within 2026 guidance framework.

Management attributed 12% chemistry growth to mix of innovation commanding premium pricing, new products (MaxWeek Premier, SEC columns, oligonucleotide, slalom chromatography, affinity chromatography). Noted Waters achieving 400-450 bps pricing on chemistry, 200 bps on overall portfolio. BD historically achieved 40-50 bps, presenting significant reapplication opportunity. Chemistry guidance for 2026 assumes 6% vs. 12% actual 2025.

Chemistry 2025 growth: 12%Waters chemistry pricing: 400-450 bps like-for-like SKU/geographyWaters overall portfolio pricing: 200 bps like-for-likeBD historical pricing: 40-50 bps, significant upside opportunity

Answers to last quarter's watch list

Whether Q4 instruments growth lands above the ~5% implied in segment guidance — Instruments grew +3% in Q4, below the ~5% Q3 implied. Management attributed the miss to China DRG, US shutdown, weak flu season, and an Empower transition drag. Q1 order momentum reportedly exceeds sales, but the Q4 print is below trend.
Resolved negatively
Empower subscription transition: any quantified customer count or ARR contribution — Management said the transition was a low-single-digit instrument headwind in Q4 and headwinds are baked into the FY2026 guide; the upside half of last quarter's "low double-digit millions per fleet" framing was not quantified.
Not resolved
CRO cohort re-engagement — No specific CRO commentary appeared in the prepared remarks or Q&A. Q1 funnel was described as "extremely strong" but the CRO segment wasn't broken out.
Continue monitoring
BD close execution: end-of-Q1-2026 timing and synergy bridge changes — Close happened on the day of the call, ahead of the prior "around the end of the first quarter" expectation. The FY2026 guide now embeds $3.0B BD contribution, $50M revenue synergies, and $179M net interest expense.
Resolved positively
2026 guidance framework: 6–8% core growth and 50–100bps margin expansion — Organic constant-currency growth guided at +5.5–7.0% (midpoint 6.3%), modestly below the 6–8% Schenkel framework. Combined company sales growth is 5.3% at midpoint. Non-GAAP EPS growth of +8.9–10.4% implies operating leverage but the press release does not quantify margin expansion.
Resolved negatively
TA segment durability — Industrial grew +8% in Q4, suggesting the Q3 inflection extended rather than reversed. (The press release no longer breaks out TA as a separate segment under the new organic structure.).
Resolved positively

What to watch into next quarter

Whether Q1 instruments orders/sales conversion sustains the "extremely strong" funnel commentary — a Q1 print at the high end of the +7–9% organic cc range would validate the back-loaded EPS framework; the low end would call it into question

BD revenue synergy realization pace — $50M is in the FY guide; watch Q1 commentary on deal-desk implementation and early progress on instrument replacement, e-commerce, and service attach

Chemistry growth trajectory against the 6% FY2026 assumption versus the 12% actual finish to 2025 — the largest single visible source of guidance upside

China growth versus the mid-single-digit assumption — Q4 came in at +11% cc Asia (vs. Q3 cc of +13%); China specifically was +3% in Q4 as DRG headwinds emerged, and whether that was policy-timing or a structural reset matters for the upside list

Quantification of BD margin progression — the 22.4% standalone BD adjusted operating margin embedded in the 2026 deal model implies meaningful expansion runway; first concrete margin print on the combined entity will frame the synergy credibility

Empower transition: any disclosure that converts the "headwind already in guidance" into a quantified upside path as customers complete the subscription move

Sources

  1. Waters Corporation Q4 2025 press release (Form 8-K Exhibit 99.1), filed via SEC EDGAR: https://www.sec.gov/Archives/edgar/data/1000697/000119312526041897/d37473dex991.htm
  2. Waters Corporation Q4 2025 earnings call Q&A (analyst attribution and quotes)

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